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TSG Consumer Partners recognized that the Mexican food segment was a $2.4 billion market and would continue to experience a high growth rate. Growth of the Hispanic population was expected to be three times the U.S. average, with a high percentage of that group concentrated in California and Texas. Competition in this segment of the food industry was very fragmented, with numerous acquisition opportunities.
We acquired an initial equity stake in La Victoria, a leader in sauces and salsa, the biggest segment in the Mexican food industry, in April 1997. We formed Authentic Specialty Foods by merging La Victoria with Calidad Foods, a manufacturer and marketer of branded tortillas and other Mexican food products. This combination created the largest U.S.-based branded food company targeted towards Mexican Americans.
Between 1997 and 1998, TSG Consumer Partners and Authentic Specialty Foods consummated three additional acquisitions: La Monita, The Tortilla King and Sauces Unlimited. We recruited a CEO for the holding company as well as for Calidad Foods and La Victoria. We also expanded and consolidated manufacturing for all Mexican food operations. By investing in brand support and improving the distribution, we were able to substantially grow sales.
A public offering in the combined entity was completed in September 1997 in a transaction that was extremely well received by the financial community. We sold the company in June 1998, a year and a half after being formed, to a major Mexico-based public company, DESC S.A., for a sizable premium over the IPO price and an IRR for TSG Consumer Partners of 187%.
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Copyright © 2008 TSG Consumer Partners. All Rights Reserved.
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